TiVo on a roll, helped by Pace

By Chris Forrester

November 29, 2012

PVR specialist TiVo has reported a very healthy set of Q3 numbers with excellent subscriber growth as well as a strong revenue pile from litigation successes. It declared that it now has almost 3 million subscribers, helped by a further 250,000 net gains from deals struck with cable MSOs.

TiVo explained that it is working with UK set-top supplier Pace on developing a new 6-tuner hybrid QAM-IP Gateway boxTiVo reported service and technology revenues of $61 million, which was up 18 per cent from a year ago. It also reported net income of $59 million, which was bolstered by $78.4 million from litigation proceeds stemming from the Verizon settlement. Indeed, TiVo’s patent litigation successes have now earned the company more than $1 billion in either damages or royalty payments.

Tom Rogers, CEO at TiVo, told analysts that he expected “these positive operational and financial trends will continue. Our subscription base continues to grow rapidly. Total subscriptions increased 44 per cent year-over-year as our existing deals with pay-TV operators brought TiVo to more and more homes, leading to year-over-year MSO service revenue growth of 84 per cent, compared to 22 per cent growth in the second quarter. In addition, we signed new operator partnerships and continue to build our data analytics business.”

Rogers explained that TiVo now has distribution relationships with nine of the top 21 cable operators in the US, including three new deals struck recently (Mediacom, Midcontinent and Cable ONE).

He added that TiVo’s relationship with UK-based Virgin Media was being extended “beyond the set-top box by delivering live TV and video-on-demand through an IP network from a cloud to a variety of devices, which present the content through the TiVo interface. Virgin Media has recently introduced an app for iOS devices, as well as a web portal that will give subscribers access to live program viewing on tablets and smartphones, thousands of hours of on-demand content on computers, plus the ability to remotely manage their TiVo service all through the TiVo interface.”

Rogers said: “Outside the US, the opportunity is even bigger where we’re looking to replicate the successes of Virgin Media and ONO in a potential market of more than 400 million pay television homes. In fact, the combination of our progress to date and the opportunity ahead means the percentage of total company revenue coming from service providers should more than double over the next two fiscal years.”

Referring specifically to its Pace deal, Tom Rogers said: “The Pace offering in the United States is one that a number of our MSO customers are very interested in. Some will begin their rollout of TiVo with our hardware. But clearly, there was a view that Pace as a major manufacturer could have a high-quality lower cost hardware solution than our TiVo hardware represents. And when married with our software, gives operators a great hardware/software combination at a lower cost, which we’re quite happy to see since our involvement with hardware for operators has generally not involved any margins.”